Vietnam - Keeping vigilant over central bank inspectors’ eyes, banks sell dollars hesitantly

by lexie Tue Nov 08, 2011 11:20 pm

November 8, 2011

Keeping vigilant over central bank inspectors’ eyes, banks sell dollars hesitantly

Commercial banks have become more hesitate to sell dollars at the prices higher than the ceiling levels after the State Bank continuously threatens to heavily punish the violators. Some banks have halted selling dollars to individuals, reasoning the short supply.

An officer of a joint stock bank in Dong Da district in Hanoi said that earlier this year, when the central bank kept stricter control over the foreign currency market, most of banks refused to sell dollars to individual clients, but they only prioritized selling dollars to businesses due to the short supply.

However, the bank has refused to sell dollars to businesses over the last few days as well, also because of the short supply. Though banks still quote the dollar price at 21,011 dong per dollar, the actual price applied in transactions is 21,490 dong per dollar, because banks only can make profit if they sell dollars at this price.

The officer said that it is unclear when the bank branch would resume the sale of dollars, because it needs to await the decision from the bank’s headquarter.

Some other banks in Hanoi refused to sell dollars to clients, reasoning that the supply comes late, but suggests the way which can help those, who have dollar demand, approach the sellers.

Loan, an accountant of a footwear company in Hanoi, said that though accepting the high price of 21,550 dong per dollar set up by the bank, her company still cannot buy dollars.

A bank officer suggested that she should buy dollars on the black market and then sell to the bank at the quoted price of 21,011 dong per dollar. After that, the bank would re-sell the dollars to the client at 21,550 dong per dollar. As such, in order to regularize one dollar, buyers have to pay the “fee” of 500 dong per dollar

Not only the banks in Hanoi, but the banks in HCM City also keep very cautious when selling dollars, after the central bank has threatened to strengthen the inspection tours to banks and heavy punish those who sell dollars at the prices higher than the ceiling levels.

A director of a wooden furniture and fine arts manufacturing company in HCM City said that he needed to buy 20,000 dollars to import materials, but all the three banks he contacted, told him that they do not have dollars to sell, and told him to wait some more time.

While banks say to some businesses that they do not have dollars to sell, they still have profuse dollars to sell to loyal clients, of course, at the prices higher than the ceiling prices. Since the buyers are loyal clients, banks do not fear that they may be cheated in the transactions.

A director of a plastics company in Tan Phu district in HCM City said that on November 4, he contacted a bank with which he has a close relationship, and he was told that he could buy as many dollars as he wanted. The price would be 21,600 dong per dollar, or 600 dong per dollar higher than the allowed level.

The dollar price has been increasing sharply again after several days of going down. The actual dollar price has increased by 200-250 dong per dollar to 21,520-21,550 dong per dollar, while the quoted price remains at 21,011 dong per dollar.

While dollar transactions have been heating up on the official market (bank to business market), the dollar price in the black market remains stable. On November 4, foreign currency exchange shops in Hanoi offered to sell dollars at 21,450 dong per dollar, the same price as November 3’s price. However, if comparing the price with the first days of the week, one would see that the dollar price has increased by 30-40 dong per dollar.

Chinh, the owner of a foreign currency shop on Ha Trung Street in Hanoi said that dollar traders now have to offer higher prices to buy more dollars to satisfy the increasing demand. Meanwhile, they cannot set up higher dollar sale prices, because a lot of buyers dare not make transactions at these days amid the stricter control by the State Bank.

http://www.vietfinancenews.com/2011/11/keeping-vigilant-over-central-bank.html#more